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Welsh business confidence rebuilds

Welsh business confidence is now the second highest across the UK, although still sits lower than it did this time last year, FSB’s latest Small Business Index has shown.

However, the picture on employment was not so positive, with Wales scoring the worst in terms of quarter 2 employment levels, with further cuts expected. 26% of Welsh businesses reported a reduction in employment levels over the last three months, with more than 1 in 5 firms expecting additional cuts to the numbers that they employ in the coming months.

As lockdown curtailed spending and consumer behaviour, 74% of businesses reported lower gross profit levels, although 16% of firms reported an increase. Although not as low as the rest of the UK, Welsh businesses do report low expectations of profits in the coming months, however the overall picture comes in above the UK average, indicative of resilience in the Welsh business community.

Commenting, Ben Francis, FSB Wales Policy Chair, said:

“Recent months have seen business confidence be shaken like never before due to the economic impact of the coronavirus pandemic.

“Despite the huge disruption and uncertainty, the SBI shows us that Welsh businesses are beginning to rebuild, and that their confidence is building with it.

“The suggestions on employment, however, are particularly troubling, and tell us how important it is that we make a success of reopening Welsh businesses, to give these firms the best possible opportunity to make a success of their circumstance and avoid difficult decisions regarding staffing wherever possible.

“With many firms now newly reopened, whilst indoor tourism and hospitality hope to do so on the 3rd August, we must now turn our attention to the need to make reopening both safe and successful.

“FSB Wales has laid out several recommendations to this end in our recent report Open for Business which suggests how small businesses can temporarily use outdoor and public spaces to increase their capacity whilst complying with social distancing. We’ve been really pleased to see Welsh Government introduce a £9 million fund for towns to help facilitate this, but the next steps are to make this a reality for businesses in every town, village and city across the country.

“This is a job for Welsh Government, local authorities and communities in every part of Wales. Small businesses make up the very heart of our high streets and our society, and its imperative that we do everything that we can to help them reopen successfully this summer, so that they can have every chance at a sustainable future.

“More widely, we know that as the Job Retention Scheme is gradually withdrawn, and in the absence of significant economic revival, the coming few months will be very testing times indeed for smaller businesses across Wales.

“While the support available from UK and Welsh Governments has been very welcome, there will very likely be a further call on support and for governments to do all they can to facilitate the ability of businesses to trade effectively.”